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The Collision technology conference hit Toronto last week, drawing over 30,000 attendees to pitch, partner, learn, teach and observe all things tech at a convention centre the size of a hockey arena. There were dozens of start-ups from around the world pitching everything from edtech to cybersecurity amid hundreds of booths and several stages where tech companies great and small announced their latest marketing campaigns or digital products. Among them were the publicly-traded companies listed below which have been battered on the Nasdaq so far this year, but may hold promise down the road.
Walmart Inc (WMT-N)
During Collision, Walmart launched Blue Labs, proclaiming it to be the future of retail. Blue Labs is Walmart’s new innovation team and the retail giant was calling on the attendees of Collision to join Blue Labs to, well, innovate. Blue Labs stresses sustainability and better returns for Walmart customers.
Walmart offered an informal survey (see photos) asking conference attendees, Where do you see technology shaping the future of retail? “It will be time-saving” edged out “It will give us a modern supply chain.” The second question was, “What type of technology will create the most change in retail?” By far, the most popular response was “Data analytics for highly personalized shopping experiences.” Doubtless, Walmart execs will take note of the results and oriented their digital strategy in these ways. In fact, the company has pledged to invest $30 billion through 2030.
Presently, Walmart stocks and big retail are out of favour on Wall Street. Supply chain delays, hot inflation, higher wages and now product markdowns are plaguing Walmart and its peers. Further, WM’s last report noted a shift in consumer spending from household stuff to experiences. The company lowered EPS guidance as overall revenues in Q1 fell $5 billion from divesting businesses in the U.K., Japan and Argentina, further weighed by another $0.4 million of unfavourable forex. Meanwhile, international net sales slid 13% to $23.8 billion while net sales declined $5 billion. Adjusted EPS in Q1 reached $1.30, down 23.1% from a year ago. Management forecasted another 1% decline in EPS before flattening. That said, the company beat in Q1, but missed in Q2 which caused shares to slide from $148 to below $120.
The macro picture needs to improve before Walmart stocks climb again and this demands patience if you’re an existing shareholder. Hold. The more adventurous can dip their toe now, but if you want to buy an American retailer, Dollar General is a better bet.
Meta Platforms Inc / Facebook (FB-Q)
Meta (aka Facebook) is the bad kid in the FAANG family. Meta is always getting into trouble with governments ever since the 2016 U.S. election and U.K. Brexit vote. Collision unearthed a controversy that erupted last year down under in a panel entitled, How Facebook extorted Australia. Whistleblower Aid, a Toronto M.P., a digital content journalist and a digital trade organization excoriated Meta for removing local news stories in Australia because a proposed law there would have forced tech giants to pay for news content. To be fair, Alphabet was also a culprit. (In contrast, Microsoft pledged to pay for its news.) Since then, the law has forced Meta and Alphabet to pay over US$150 million to news organizations. Similar laws are in the works in Canada and the U.S.
The amount Meta paid is a drop in the bucket for company worth nearly $500 billion, but it makes shareholders like me shake my head over why the company keeps stepping into unnecessary controversies. It doesn’t help the share price which has tanked by more than half from its 52-week high of $384.33. And it doesn’t attract ESG investors who value good corporate governance. So, why not sell Meta stocks?
Meta can still monetize its massive user base (of 6.3 billion monthly users) better than other company on the plan. Also, shares are cheap, trading around 12.5x PE, though the 1.38 beta is high.
Shareholders also have faith that CEO and founder Mark Zuckerberg can actually pivot to the metaverse down the road. They reason that this guy invented social media, so he can create the metaverse, though nobody knows what it is yet. Those with faith should buy. Shares haven’t been this low since right before the pandemic. Those who stay away are excused.
Airbnb (ABNB-Q)
Some companies at Collision didn’t have big news to share, but graced the stage to shill their services. Airbnb fell into this camp. Nothing wrong with that. After all, I’ve been using their app for over 10 years. With the current travel boom, Airbnb’s business should be good, perhaps great. A study by M Science data states that as of May 22 American spending on homeshares was up 57.1% from three years earlier (pre-Covid). The average order value jumped 73%. Airbnb still leads in market share at 74.6%, followed distantly by Vrbo (Expedia) at 20.8% and Vacasa at 4.6%. In early May, ABNB stocks posted a 70% rise in revenue over 2021 to $1.5 billion beating the street’s $1.45 billion. Further, this revenue is 80% higher than in 2019. Lastly, the company’s average daily rates in Q1 2022 were up 37% over Q1 in 2019. To compare, hotel rates in New York jumped 69% between May 2021 and May 2022. I’ve written about ABNB stocks recently, so I’ll just end this by reiterating the stock as a buy.
